Investment clubs provide members a means to learn about markets, while meeting and working with people who have similar interests.
Many clubs are educational in nature with objectives in line with learning how to make smart long-term investments.
These clubs normally buy real estate or notes (loans originated by a licensed third party) to benefit from: cash flow, appreciation of assets, instant equity, tax benefits from deductions or qualified dividends, group buying power, monthly or daily compounding, higher liquidity and diversification of risk.
Investment types range from a group of people buying lower risk franchises with at least two years of significant revenues and positive cash flow like major fast food franchises, gas stations and hotels to higher risk businesses without an income history like start-ups, inventions, or product patenting and prototype development.
A typical club will have informal channels of communication via mailing lists, Twitter accounts or message boards.
A typical meeting agenda will include all the normal activity you would expect in an organization with elected officials.
A typical meeting agenda: [citation needed] Investment clubs are normally unincorporated associations.
The clubs are not taxed corporately, and members should account individually for their share of profits and capital gains.
[10] Investment clubs are generally formed as general partnerships, but could also be formed as limited liability companies, limited liability partnerships, corporations, or sole proprietorship that transfer real estate assets to a group living trust (similar to a family trust).
Publicly held offerings like a real estate investment trust also have additional reporting requirements.
[11] In the United Kingdom investment clubs and their members are required to submit form 185 (new) to HMRC each year.